TOKYO -- NEC Corp. here today announced plans to invest $60 million over the next three years in a new U.S.-based Communications Strategic Business Unit, which will develop and market semiconductor products and technologies for wired communications systems applications.

The expansion of the business unit, based in Santa Clara, is part of NEC's strategy to transform itself into an Internet-focused company, according to officials in Tokyo. NEC said it is now adding 60 designers and engineers to the Santa Clara-based business unit.

"NEC's focus on wired communications is part of a worldwide strategy directed from the company's Second System LSI Division, headquartered in Tokyo," said Kyuichi Hareyama, general manager of the division. He said the expansion of the Communications Strategic Business Unit, located in the U.S., is a key part of that worldwide directive. "In addition to having
easier access to emerging technology and leading-edge partners, the Communications SBU will also better serve its North American customers," he added.

NEC also appointed Yasuharu Tomimitsu as general manager of the Communications Strategic Business Unit. A 21-year veteran of NEC, Tomimitsu has taken the lead in the development of communications application-specific standard products (ASSP), such as network controller, ATM devices and digital subscriber line (DSL) physical layer (PHY) chips.

Formed last June, the new communications business unit is initially targeting two areas: network controllers and high-speed serial interfaces. Both groups represent parts already sold by NEC into communications, said Hitoshi Yoshizawa, vice president of business development for the unit.

"We may not be the most advanced in all product areas, but we are focusing on two where we think we run very clearly on par with the recognized leaders in the market," he said. Referring to NEC's budget of $60 million for R&D in the next three years, Yoshizawa said, "We are not ahead of most customers, but we can afford tremendous investment in the next two to three years."

Yoshizawa has visions of making NEC a "first-tier supplier" in communications. By 2003, he hopes to double NEC's market share in both ASSPs to 6%, and increase NEC's share of the cell-based communications ASIC market to 20% from 17%. Competition is stiff, particularly on the ASSP side where NEC will face the likes of Lucent Technologies Inc., PMC-Sierra Inc. and Broadcom Corp.

NEC's network controllers will be based on the company's VR4120, a Mips-based, 64-bit processor. The VR4120 reaches speeds of 100 MHz and is slated to move to 133 MHz later this year.

The controllers will be split into two camps: those built for pure speed and targeted at network-core hardware; and those packed with peripherals, aimed at the small-office and residential markets, Yoshizawa said.

In high-speed interfaces, NEC Communications will continue to produce parts and ASIC cores for protocols including Ethernet, ATM, Fibre Channel and Sonet.

Among NEC's most advanced products in interfaces is the µPD98501, a network controller which is based on the VR4120 and includes two 100 Mbit/s Ethernet MACs, a USB controller, and an ATM cell processor. The part, a more advanced version of NEC's µPD98453, is in the hands of beta testers and is due to reach volume production by the end of the year.